Coinbase Insights: How Fed’s Interest Rate Decisions and Quantitative Tightening Could Impact Bitcoin Prices

On March 18th, insights from Coinbase‘s Institutional Research Director, David Duong, suggested that the cryptocurrency market anticipates the Federal Reserve will maintain its current interest rates during the upcoming Federal Open Market Committee meeting. However, he advised stakeholders to closely monitor potential adjustments to the Fed’s balance sheet reduction strategy, also known as quantitative tightening (QT). In his recent report, Duong pointed out that bank reserve levels have surged to approximately 10-11% of the U.S. GDP, a threshold typically regarded as adequate for ensuring financial stability. Furthermore, he highlighted that the recent decline in cryptocurrency prices was largely attributed to broader macroeconomic challenges and reduced liquidity. Yet, he remains optimistic that these conditions may ameliorate in the subsequent quarter, potentially stabilizing and boosting asset valuations.